Now’s the time to do a portfolio checkup.
Midyear is a great time to do a portfolio checkup and re-evaluate your stock choices. Where you invest now can set the tone for a strong finish to the year. While optimism remains high — the Wells Fargo Gallup Investor Optimism Index notched 103 through the second quarter — the possibility of this historically long bull market drawing to its close can’t be ignored. With that in mind, the best stocks to buy now are ones that offer stability in a volatile market. Some are value plays, while others have growth potential, but these eight picks represent the best stocks to buy for the second half of 2018.
Amazon.com (ticker: AMZN)
Amazon’s share price has nearly doubled over the last year and the outlook for continued growth is positive as its brick-and-mortar competitors struggle to remain relevant. “Amazon was up in the first quarter 23.8 percent, despite President [Donald] Trump’s threats and complaints of Amazon getting favorable rates from the United States Postal Service,” says Don Orban, CEO of Midwest Retirement Advisors in Omaha, Nebraska. Amazon’s most recent earnings report set a company record with profits of nearly $2 billion. Though not a bargain, Amazon is still one of the best stocks to buy as the company prepares to expand its footprint and claim a wider swath of market share through 2018 and beyond.
Johnson & Johnson (JNJ)
Despite a disappointing start in 2018, Johnson & Johnson belongs on investor radars with value and competitive dividends. “We see Johnson & Johnson shares as attractive, especially as the company’s revenue and profit growth beat Wall Street’s targets in the first quarter on new JNJ medicines gaining market share,” says Mike Bailey, research director at FBB Capital Partners in Bethesda, Maryland. Sales of two blood cancer drugs — Darzalex and Imbruvica — offset slower growth for consumer and medical device franchises. A low valuation and 3 percent dividend yield “set up a compelling second-half opportunity as the company manages through risks, such as a stronger dollar and new competition for older JNJ drugs.”
Sonic Corp. (SONC)
Sonic ranks as one of the best buys for value. “With the economy strong, consumers are out spending, and we’ve seen the consumer is still interested in a fast, convenient way to feed their family,” says Trip Miller, managing partner at Gullane Capital Partners in Memphis, Tennessee. “From a macro-economic standpoint, we know that plays well after the tax cuts and the consumer having a little more money in their pocket.” Sonic has bought back almost 10 percent of its shares this year, which could play a big part in stock performance throughout 2018. Investors will benefit “as it continues to return capital, not only buybacks, but also paying increasing dividends to shareholders.”
Sempra Energy (SRE)
Mid-June saw Sempra Energy shares take a 15 percent leap, a pre-cursor to the company’s announcement that it plans to sell wind, solar and energy distribution assets and redirect its focus toward North American electric utilities. Bailey says SRE shares should perform well in the second half of 2018 “as the company slims down and lays the groundwork for potential sales of South American energy assets and possibly a liquefied natural gas export business.” Mexico’s July presidential politics is a question mark, as energy reform has been a central issue of debate, but Bailey says “simplification will help SRE’s management avoid distraction, overcome risks and attract a higher valuation.”
Bank of America Corp. (BAC)
When interest rates rise, the financial sector benefits as lenders are positioned to charge consumers more to borrow. With two additional rate hikes in the forecast for the remainder of 2018 and an increasingly friendly regulatory environment, Bank of America rates as one of the best stocks to buy, based on valuation and share-price gains. “Bank of America will see a large tax break with the Trump tax plan and interest rates rising, both of which will lead to increased profits,” Orban says. And unlike Citigroup (C) and several other big banks, “Bank of America passed the Fed’s stress test and is the second-largest bank in the world.”
Walt Disney Co. (DIS)
Disney stock is a “trophy asset selling at a significant discount,” says Drew Kellerman, founder of Phase 2 Wealth Advisors in Gig Harbor, Washington. Consider the company’s holdings, which include Walt Disney Parks & Resorts, ESPN and Disney/ABC Television Group. Those are complemented by recent acquisitions of Marvel Cinematic Universe, Lucasfilm and Pixar Animation Studios, which “all help diversify and strengthen Disney’s revenue sources.” Looking ahead, those revenue streams may increase even further as Disney moves to finalize the purchase of Twenty-First Century Fox (FOXA). “If this deal goes through, it may give Disney even greater media domination, profitability and shareholder value,” Kellerman says.
Huntington Ingalls Industries (HII)
Huntington Ingalls Industries holds the sole contract for building, maintaining and overhauling a new fleet of 11 Ford-Class aircraft carriers. “As the U.S. Navy invests in upgrading its aging fleets, [HII] stands to profit handsomely for decades to come,” Kellerman says. He says the company also is a preferred vendor, working with General Dynamics Corp. (GD), of nuclear attack submarines, destroyers and amphibious assault craft, plus the National Security Center Cutter fleet for the U.S. Coast Guard. “A recent price pullback in the stock price has shares of HII trading at a significant discount compared to the broader defense industry,” making it one of the best stocks to buy now for value investors.
Wynn Resorts (WYNN)
Wynn Resorts has seen a pullback in pricing over the last month or so, moving from $200 to around $150 to kick off July. Miller attributes the shift to fears over China and trade that could affect the gaming business but sees it as a short-term trend. “We believe that Wynn has a lot of catalysts, both domestically and internationally, coming into play so we won’t be surprised if we see the stock rebound and re-test the highs in the second half of the year, as they continue to increase their dividend there as well.” Investors who buy now could reap the benefits if the stock experiences a turnaround by year’s end.
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8 of the Best Stocks to Buy for the Rest of 2018 originally appeared on usnews.com
